Political Violence v Terrorism - What’s the difference?
25 March 2018
Following the launch of Geo Specialty Political Violence in August, we have had a lot of questions around what Political Violence means and how it differs from Terrorism coverage. We sat down with our expert Senior Underwriter, Marcus Meredith, to bring some clarity.
Marcus joined us in Geo Specialty earlier this year from Dual Underwriting where he had successfully built out the Political Violence and Terrorism division over the last 6 years.
Marcus joined the Lloyd’s Terrorism Market in 2011 after five years in the British Army where he was a Captain in The Coldstream Guards touring in the Middle East, Africa and Central America. He gained exposure to heavy industry and agricultural projects whilst stationed in Afghanistan and subsequently as an analyst for a Lloyd’s syndicate specialising in Oil and Gas placements in Iraq and North Africa.
Marcus’ background gives him a unique advantage in insurance through an understanding of risk profile, security and ordinance when analysing risks.
So, what is the difference between Political Violence and Terrorism?
The Lloyd’s Terrorism Market and the government backed Pool Re were born out of the IRA attacks in the UK at the end of last century and brought further into focus by the Bishopsgate bombing in 1993 which caused hundreds of millions of pounds worth of property damage claims.
The Terrorism and Sabotage cover offered through Pool Re acts as a back stop to cover the commercial property market from physical damage and property loss in the event of a terrorist attack, which historically has been a vehicle borne explosive device made from either P4 explosive or TNT.
In recent years however, we have seen an increase in self-radicalisation, and returning Jihadists from Iraq and Syria which have led to the attacks this year in Manchester, Borough Market and Parsons Green. These unsophisticated attacks, also seen recently across Western Europe, favour the use of Improvised Explosive Device (IED) bombs, or knife/car/shooter attacks made for mass casualties and bodily injury rather than to cause huge physical damage.
This new approach has highlighted some significant gaps in the traditional Terrorism insurance market, in particular with regards to the business interruption after a terrorist attack. This change in approach has meant that insurers have had to adapt their coverage.
The new Geo Specialty Political Violence product offers, as standard, denial of access wording which would indemnify the insured against the business interruption caused by a terrorist event up to 500 metres from the site of the event.
Our wordings are designed to protect businesses from the new style of attacks we’ve seen over the last few months and we are constantly looking at innovating our products to offer our clients peace of mind: we are ready to react in the event that the worst happens.
We offer protections to these gaps through a bespoke, stand-alone approach and offer extensive wordings to include:
- Denial of access
- Looting post loss
- specified or non-specified suppliers
- alternative accommodation for up to 25% of the total insured value, and
- 135% day one uplift clause
Full Political Violence cover is a wider solution for international clients and their assets, and on top of the sabotage and terrorism policies we issue in the UK we can also offer broader cover, which includes:
- Malicious damage (MD)
- Strikes, Riots and Civil Commotion (SRCC)
- Insurrection, Mutiny, Coup d’état
- Full War
The clients who purchase these broader covers are normally protecting assets in more politically unstable parts of the world, such as The Middle East and North Africa. Since the Arab Spring in 2010/2011 the market has seen a big increase in International companies requesting War coverage. We have also seen a dramatic rise in requests for SRCC cover from South and Central America following a period of unprecedented political instability, in part caused by the fluctuating commodity prices on the world stock exchange, on which many South and Central American countries heavily rely.
If you’d like to find out more about what Geo Specialty can offer, visit our website at geospecialty.co.uk or get in touch with Marcus on 07990 511995.